Natural gas futures are volatile.
That much is widely known and that volatility explains the
allure of an ETF such as the U.S. Natural Gas Fund (NYSE:
) for active, short-term traders. With natural gas futures
soaring recently and getting another lift Tuesday after the U.S.
National Weather Service issued a warmer-than-expected
six-to-ten-day forecast for the eastern part of the U.S., UNG is
again in the spotlight.
And with that comes traders embracing even more volatile fare
such as the leveraged ProShares Ultra DJ-UBS Natural Gas (NYSE:
), BOIL's bearish equivalent, the ProShares UltraShort DJ-UBS
Natural Gas (NYSE:
), and the VelocityShares 3x Long Natural Gas ETN (NYSE:
Those that want to take a more conservative to profiting from
rising natural gas futures have options, too. One of the better
choices is the First Trust ISE-Revere Natural Gas Index Fund
). As has been previously noted, FCG's name is somewhat deceiving
plenty of the ETF's holdings
either have significant oil exposure or are working to boost
their oil profiles.
Examples include top-10 holdings such as Apache (NYSE:
) and Anadarko Petroleum (NYSE:
). While FCG, home to 28 stocks, is an equity-based natural gas
play that does not mean aggressive traders will be put to sleep
by this ETF. The fund's three-year standard deviation is almost
460 basis points higher than the S&P 1500 Energy Index's and
FCG has a beta of 1.41,
according to First Trust data
. A boring ETF this is not.
Still, FCG is perceived as being more docile than UNG. The
trade-off is fair, however. FCG has over $$446.4 million in
assets under management, but the fund can overlooked
compared to other energy sector ETFs
. The popularity trade off is worth making as well.
In the past month, FCG has surged 11.8 percent while UNG,
despite a nice performance Tuesday, is lower by five percent.
Even the Energy Select Sector SPDR (NYSE:
) has lagged FCG in the past month and that is with the benefit
of a 10.5 percent pop for XLE.
What is also important about FCG's move high over the past
three days is that the ETF has broken through resistance created
downtrend line that dates back to last September
. The ETF now has an unencumbered path in front of it to rise the
5.8 percent necessary to return to its 52-week high around
Bottom line: FCG is useful on multiple fronts. First, the ETF
is solid option to UNG for risk-averse investors. Second, the ETF
can be paired with a large-cap focused fund such as XLE so
investors can have mid- and small-cap energy sector exposure as
For more on
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Profit with More New & Research
. Gain access to a streaming platform with all the information
you need to invest better today.
Click here to start your 14 Day Trial of Benzinga